[October 16, 2014] |
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Special Diversified Opportunities Inc. Adopts Tax Benefit Preservation Stockholder Rights Plan
WILMINGTON, Del. --(Business Wire)--
Special Diversified Opportunities Inc. (the "Company") (OTC:SDOI), today
announced that its Board of Directors has approved the adoption of a tax
benefit preservation stockholder rights plan (the "rights plan")
designed to protect the Company's valuable federal net operating losses
(NOLs) under Section 382 of the Internal Revenue Code.
As of June 30, 2014, the Company had NOLs amounting to approximately $19
million. The Company may utilize these tax attributes in certain
circumstances to offset future U.S. taxable income and reduce its U.S.
federal income tax liability, which may arise even in periods when the
Company incurs an accounting loss for reporting purposes. However, the
Company's ability to use its NOLs could be substantially limited if
there were an "ownership change" as defined under Section 382 of the
Internal Revenue Code. In general, an ownership change would occur if
certain ownership changes related to the Company's stock held by a 5% or
greater stockholder exceeded 50%, measured over various measuring points
over a three-year period beginning with the last ownership change. These
provisions can be triggered not only by merger and acquisition activity,
but by normal market trading as well. The rights plan is designed to
deter trading that would lead to the loss of the Company's valuable NOLs
and a resulting reduction in the Company's value.
The Company's Board of Directors has the discretion to exempt an
acquisition of common stock from the provisions of the rights plan if it
determines that the acquisition will not jeopardize tax benefits or is
otherwise in the Company's best interests. The rights plan was
adopted with the sole intent of preserving the Company's tx
attributes, which are important and valuable assets of the Company, and
not with the goal of deterring any strategic transactions. The rights
plan has a limited life and is not intended for defensive or
anti-takeover purposes. The Board of Directors is open to considering
all alternatives to maximize stockholder value.
In connection with the adoption of the rights plan, on October 15, 2014,
the Board declared a non-taxable dividend of one preferred share
purchase right for each outstanding share of common stock to the
Company's stockholders of record as of the close of business on October
29, 2014. Under the Company's rights plan, when a person or group has
obtained beneficial ownership of 4.9% or more of the Company's common
stock, or an existing holder (as of October 16, 2014) with greater than
4.9% ownership acquires more shares representing an additional 1.0% of
the Company's common stock, there would be a triggering event that may
result in the exercise of the preferred share purchase rights, which
would cause significant dilution in the economic interest and voting
power of such person or group.
The rights plan has a termination date of October 16, 2015, subject to
earlier termination in certain circumstances, including by the Board of
Directors at any time prior to the preferred share purchase rights being
triggered. Additional information regarding the tax benefit preservation
rights plan will be contained in a Current Report on Form 8-K and in a
Registration Statement on Form 8-A that the Company is filing with the
Securities and Exchange Commission today.
Forward-Looking Statements
The statements in this press release that are not historical fact are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements include
statements concerning plans, objectives, goals, strategies, future
events or performance, and underlying assumptions and other statements
that are other than statements of historical facts, including but not
limited to statements regarding the value and treatment of the Company's
NOLs. These statements are subject to uncertainties and risks including,
but not limited to, the Company's ability to address issues arising from
previously disclosed accounting-related matters, operating performance,
general financial, economic, and political conditions affecting the
Company's business and its target industries, the ability of the Company
to perform its obligations under its contracts and agreements with
customers, and other risks contained in reports filed by the Company
with the Securities and Exchange Commission, included in our Form 10-K
for the year ended December 31, 2013. The words "may," "could,"
"should," "would," "believe," "are confident," "anticipate," "estimate,"
"expect," "intend," "plan," "aspire," and similar expressions are
intended to identify forward-looking statements. All such statements are
made in good faith by the Company pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The
Company does not undertake to update any forward looking statement,
whether written or oral, which may be made from time to time by or on
behalf of the Company, except as may be required by applicable law or
regulations.
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